Thank You

Error.

Soft-spoken William Campbell is the senior advisor to the chairman of JPMorgan Chase, but he has also assumed a host of charitable duties as well, including vice chairman of the Brooklyn Academy of Music. His wife, Christine, co-owns the gallery Winston Wächter Fine Art, while sitting on the boards of the Bay Street Theatre and, with her husband, the End Fund, a nonprofit dedicated to eradicating tropical diseases. The New York couple also runs, with their daughters, the $10 million-in-assets Campbell Family Foundation.

Exhausted? The Campbells certainly were, mostly by their foundation's nonprofit filings and monthly reports, the IRS notifications and the endless tracking of donations, sometimes to charities overseas. Their family advisor, needed for other work, was getting bogged down maintaining and tracking the Campbell Family Foundation's bureaucracy. "Just writing a check for BAM required a lot of paperwork and follow-up," says Christine Wächter Campbell.

So the Campbell family turned to Foundation Source in Fairfield, Conn., a Web-based outsourcing service that assumes the backroom functions of small- to medium-size family foundations. Originally founded in 1999 by Russian Orthodox Jews who built a proprietary tax-tracking platform for nonprofits, Foundation Source was soon afterward acquired by private-equity investors intent on bringing the efficiencies of a modern bank's backroom to the sleepy world of private family foundations. By amortizing costs across a large group of small- to medium-size foundations, they reasoned, Foundation Source could uniquely provide top-drawer backroom services at a reasonable cost.

They succeeded. Today Foundation Source has 1,000 family foundation clients and $4.5 billion in charitable funds under administration. The firm's proprietary platform provides families with many services, starting with a database of more than one million IRS-approved charities. Data and analysis, such as charities' expense-management ratios, are provided by GuideStar and Charity Navigator.

Want to make a donation to the Catholic nursery down the road, but it's not showing up on the IRS' nonprofit databank? Not a problem. Foundation Source's 60 client advisors do the due diligence and data entry, so it's safe to make the charitable donation to the local religious school, which generally reports differently to the IRS. All charitable organizations that clients want to support, wherever they are located, are automatically run through a databank of 17 terrorist watch lists, including the U.S. Treasury's "OFAC" Sanctions List and the United Nations' Consolidated Watch List.

Foundation Source then takes care of all transaction processing, cutting checks, tracking grants, paying fees and expenses, and, if necessary, even providing payroll services. Better yet, the firm calculates and pays quarterly excise taxes while maintaining all of a family foundation's tax records. It prepares and files, for example, the client's Federal 990-PFs (private foundations' IRS returns), all necessary state filings, while also handling the 1099 and 1042 forms for independent contractors and providing "donor substantiation receipts."

Foundation Source's service is attractively priced. It charges a $4,750 one-time setup fee for the basic services. Clients then pay an annual $4,900 charge, plus a sliding-scale fee ranging from 0.40% (on assets below $10 million) to 0.05% (on assets over $30 million). Past IRS studies have indicated that family foundations typically spend 1% to 1.5% of assets on annual administration and compliance. In contrast, Foundation Source clients spend, on average, 0.3% to 0.4% of assets on administration, says King McGlaughon, Foundation Source's engaging chief executive, a former Episcopal minister who previously set up Merrill Lynch's Center for Philanthropy and Non-Profit Management.

While the firm's services are built on an efficient platform, there seems to be plenty of room for customization. Stefanie Borsari, one of the senior private-client advisors who provides technical backroom advice at no extra charge, says she helps her clients make micro loans in Peru, translate and publish essays in book form, and construct "rails-to-trails public access" in Pennsylvania.

Having conquered the backroom, Foundation Source is slowly creeping into the front room. The firm's philanthropic directors, for example, can, for an additional charge, be tapped to provide big-picture strategic thinking, from "family succession planning" to "impact evaluation" to "retreats and meeting facilitation." They will set up a tailored scholarship and get it approved by the IRS for $6,500. For $1,000, they'll research a foreign organization and have it okayed in the U.S. for a one-off donation.

As the aphorism goes in this field, "once you've seen one family foundation, you've seen one family foundation." In the case of the Campbells, Foundation Source's chief philanthropic officer, Page Snow, helped the family organize a life-changing trip to Africa in 2006, which resulted in them finding their true mission: helping to eliminate 17 debilitating tropical diseases, many carried by intestinal worms and parasites, such as onchocerciasis (river blindness) and elephantiasis.

THEN FOUNDATION SOURCE then fired some rockets off for the family. In January, it set up a Webinar from a JPMorgan Chase conference room on Park Avenue, so that 40 prominent families around the country could listen in as Bill and Christine Campbell passed on hard-gained lessons about doing charitable work in Africa while making an emotional plea on behalf of their cause.

Christine talked about being "pragmatic" and how you have to be prepared to show some "tough love" when wading into Africa's "murky waters and politics." Bill recounted the first time he saw "lines of school children" getting a packet of life-preserving medication at 50 cents a pop and choked up when he talked about how this cause had become so meaningful to his family. While they spoke, the Campbells were peppered with questions from the Webinar's chat room.

After the Webinar, Bill Campbell told us he wished Foundation Source would offer more such front-room "advisory" services, which, of course, is the strategic decision McGlaughon and his board will have to make about the future path of what essentially is a successful backroom outsourcing business.

In the meantime, Foundation Source provides the perfect vantage point to observe trends unfolding in the field of philanthropy at large. Snow tells Penta she sees two trends developing with her firm's clients: First, there is a growing effort to align family foundations' investment portfolios with their charitable objectives, by searching out corporations noted for good employment practices, say, or biotech companies working on a rare disease.

The other trend, Snow says, is a shift away from family-only financing, to using the family foundation as a networking platform to raise money at large for important causes. Case in point: The Campbell Family Foundation is taking a leadership role raising $100 million for a fund battling Africa's tropical diseases, so, as Bill Campbell says, "these diseases are ended forever. It would be nice to see this happen in our lifetime."